A Birmingham lawyer behind a collapsed £22 million investigation over claims British troops shot 20 Iraqi men in cold blood has claimed there are still important questions to answer.

City-based Public Interest Lawyers were behind the huge legal challenge which was based around witness claims the men were taken prisoner by British soldiers, and later mistreated and murdered.

But the Al-Sweady Public Inquiry eventually admitted there was no concrete evidence the insurgents had been unlawfully killed while prisoners of the British Army.

Despite the latest development John Dickinson from Public Interest Lawyers (PIL) said the inquiry would still have to consider allegations UK troops mistreated Iraqi civilians.

The development in the Al-Sweady Public Inquiry saw PIL announce that, following the conclusion of the military’s case, there was “insufficient evidence” the Iraqi men were unlawfully killed whilst in the custody of British troops in May 2004.

The inquiry, which has run for 167 days, was set up to look into alleged abuses of nine detainees by UK soldiers and the claims around 20 were unlawfully killed. It was claimed the Iraqis were unlawfully killed at Camp Abu Naji (CAN) near Majar-al-Kabir on May 14 and 15, 2004, and detainees were ill-treated there and later at Shaibah Logistics Base.

The inquiry, announced in 2009 and named after Hameed Al Sweady, one of those who died, is set to conclude in April, with a report later this year. The total bill had topped £22 million by the end of February.

A statement by PIL said: “Following the conclusion of the military evidence and current state of disclosure by the MoD it is our view there is insufficient material to establish that Iraqi civilians were unlawfully killed whilst in the custody of British troops at Camp Abu Naji and we have advised the inquiry of this conclusion. There remain numerous allegations of violent and other ill-treatment of Iraqi civilians in British custody which the Inquiry will have to consider.”

Inquiry chairman Sir Thayne Forbes said the statement was ‘of very considerable significance’.

Mr Dickinson said: “From the outset the families have had the simple objective of discovering the extent of any wrongdoing and if so how it came about and who was responsible.

“It is accepted that on the material which has been disclosed to date there is insufficient evidence to support a finding of unlawful killing in Camp Abu Naji.

“Certainly I would be disappointed about this if doing a claim for compensation or trying to get a criminal conviction, but what the whole process is about trying to establish what in fact occurred in May 2004.

“This is a fact-finding exercise and the families want to discover what happened to their sons and brothers. It is part of the process of finding out.”

But he was still critical of the MoD, claiming had it co-operated more fully at the outset the outcome may have been different.

“There were a number of allegations arising out of that contact,” he said. “Unfortunately they were investigated ineffectively on two occasions by the Royal Military Police.

“The families said we need an independent and thorough investigation, they went to court and so an investigation commenced.

“The MoD denied it but their disclosure of documents was very dubious, indeed it was described by the court as lamentable.

“First they said they had none, then said they had some, then said they had thousands of documents but didn’t know where they were and couldn’t find them.”

An MoD spokesman said: “We have long said that there was no credible evidence for these allegations and are pleased that they have been withdrawn.”